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Kevin Yoder is executive director of Keep US Posted, an organization that works to keep the United States Postal Service fiscally sound and operating efficiently. He served a Member of Congress from 2011 to 2019, representing Kansas. During his time in office, he served on the House Appropriations Committee. In this capacity, he was chairman of both the Homeland Security Subcommittee and the Legislative Branch Subcommittee. Yoder also served on the Agriculture, Financial Services, Transportation, Housing and Urban Development, Commerce Justice and Science, State and Foreign Operations and Military Construction and Veterans Affairs subcommittees, and he served on the House Steering Committee as deputy whip in the House GOP and vice chairman at the National Republican Congressional Committee.
Yoder has received awards for his voting record and leadership on a wide variety of issues, including a Guardian of Small Business Award from the National Federation of Independent Businesses (NFIB), a Spirit of Enterprise Award from the U.S. Chamber of Commerce, and a Legislative Excellence Award from the National Association of Manufacturers (NAM). In 2012, along with Representative Emanuel Cleaver II (D-MO), Kevin received the Consensus Civility Award for his efforts to bring civility to public life as a Member of Congress.
David Maloney, Editorial Director, DC Velocity 00:01
How will the postal reform legislation affect the U.S. Postal Service? The White House gets into the supply chain flow. And commercial real estate bounces back.
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast. Hi, I'm Dave Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by Beckhoff. Discover intralogistics automation without limits. Beckhoff offers a complete ultra-compact motion-control system for automated material handling equipment, including a range of space-saving motor and drive solutions for BLDC, MDR, servo technology, and more. Make your move to better motion control by visiting Beckhoff.com/intralogistics.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insights into the top stories of this week. But to begin today: We reported last week that Congress had passed the postal reform legislation, which will set the course for the United States Postal Service for years to come. To find out the details of the Reform Act and what changes we might expect in USPS operations, we welcome our guest today, former Congressman Kevin Yoder. He's executive director of an organization called Keep US Posted. A Republican from Kansas, Mr. Yoder served his district in the House of Representatives from 2011 through 2019, where he was a member of the House Appropriations Committee, and he also chaired the Homeland Security Subcommittee.
Welcome, Kevin. It's an honor to have you with us today.
Kevin Yoder, Executive Director, Keep US Posted 01:45
Well, Dave, thanks for having me on your program. Excited to visit with you all.
David Maloney, Editorial Director, DC Velocity 01:49
Thank you. Before we get into the nitty gritty of the postal reform legislation, what is the role of your organization, Keep Us Posted, or Keep U.S. Posted?
Kevin Yoder, Executive Director, Keep US Posted 02:00
Keep US Posted is a new organization we created last year, out of concerns amongst Americans—folks in the business industry; average everyday Americans as well—that Congress wasn't paying enough attention to postal service issues. And for a long time, these, Congress not taking up reform measures regarding the Postal Service has led to problems with the budget and operations of the Postal Service, and, you know, we know the Postal Service is one of America's most trusted institutions. It's been around since the beginning of the country; it's in the Constitution, even, that Congress has this responsibility to manage and maintain the Postal Service. And so, it's a critical function that delivers to 161 million addresses daily, and it's the only carrier that has that responsibility to deliver everywhere, no matter how remote and how rural. And so, what we saw is a disconnect between what we think Americans value, which is a well-funded, efficient postal service that delivers on time and keeps costs down. and we saw a disconnect between what Americans expect and what Congress was actually doing. So, we started, Keep US Posted to really create a link, and a voice, to those Americans that care so dearly about the Postal Service to make sure that Congress was listening to them, and that their voices are being elevated in the halls of Congress. And so, we serve to create that, that connection between the American people and Congress to make sure that Congress continues to focus on postal service issues.
David Maloney, Editorial Director, DC Velocity 03:37
As I mentioned, in the beginning, Keep Us Posted is also written as "Keep U.S. Posted," so you kind of have a double meaning there with the name of your organization and the emphasis that you have with it.
Kevin Yoder, Executive Director, Keep US Posted 03:47
Yeah, the goal is to make sure that we have a strong postal service for the United States of America, so we want us to be posted, you know, as American people, we want to make sure the Postal Service continues to be, continues to deliver for us, but we want to make sure that it functions for the entire American people, so, Keep U.S. Posted, Keep Us Posted. that is our goal, and we're pretty excited about some of the recent successes.
David Maloney, Editorial Director, DC Velocity 04:10
Now, Congress passed the legislation with very high bipartisan support. I think was 79 to 19 in the Senate, and 342 to 92 in the House. As a former congressman, does that surprise you as much as it does us with the current political climate in Washington?
Kevin Yoder, Executive Director, Keep US Posted 04:26
Well, it probably does, but it probably shouldn't, and that is because this is an issue that affects every district in the country, and you know, people have heard about these, you know, the members of Congress have been talking about doing postal reform for a long time, and it's sort of been simmering, you know, below the, below the line there. And finally, when it finally did hit the floor, you saw you know, majorities of both political parties passing the bill. Now, it took a lot of work. The last time [a] postal service reform bill passed Congress was in 2006. You're talking 16 years it took us to get to this point. I worked on it when I was in Congress for a number of years. There's been a lot of different authors to the success of this bill. But it finally reached a point where its time had come, and I think part of the success was, you know, the focus on the Postal Service the last few years really kind of elevated was—has been elevated—and I think the other challenge, other part of this was, it just kind of came at the right time. Congress, if you recall, has been really working on this Build Back Better Bill, a number of different issues that have sort of kept it really divided, and they weren't having success on those. and I think the Congress was looking for something that they could herald as a bipartisan achievement. And so, up pops the postal service reform bill at the right time, and, you know, the House passed it really easily, and then we didn't know how long the Senate may sit on it. And I think Majority Leader Schumer was looking for something to show that Congress is still acting and working while they were sort of stuck on other issues. And so it all kind of came together at the right moment.
David Maloney, Editorial Director, DC Velocity 06:06
Now, I know that the prefunding of retirees' health benefits was a major mandate that the legislation addressed. Besides that, and maybe including that, what do you feel are the most significant parts of the legislation?
Kevin Yoder, Executive Director, Keep US Posted 06:17
Well, first of all, the prefunding issue is a very significant issue, and if you look back to 2006, in that postal reform bill, required the Postal Service to prefund its retirees' health benefits 75 years in advance, and no other federal agency or entity in this country has that sort of heavy burden, and it just simply wasn't able to keep those, make those budget numbers work. It's just too heavy of a burden for the budget. So, getting that off the books was a huge issue. And then the second facet there is to have the retirees who have paid into Medicare all of their lives, is to move into Medicare, as opposed to this separate health care system. And taking that off the books for the Postal Service retirees was another huge burden that was lifted as well. And then there are some other significant issues related to service responsibilities, such as six-day delivery; there's been efforts, recent years, to move that delivery to five days, to reduce that. So, it keeps that service responsibility to six days of the week. And it also requires that the mail and the packages continue to be integrated, and there's been some efforts from outside carriers to push on the Postal Service to not have those, those packages and letters integrated together. And so, what you see here is a series of reforms that clean up the books, take some very significant burdens off the books, and create some efficiencies internally, by moving mail and packages together, etc., and guarantees on service that really brings the Postal Service together in a reform package that we had just not seen in a long time.
David Maloney, Editorial Director, DC Velocity 07:59
And right now, we're awaiting the signature from President Biden on the legislation. Once that occurs—and obviously, he's been pretty busy with a lot of other things, including the situation in Ukraine—but once he signs it, how long before we start to see some of these reforms kick in?
Kevin Yoder, Executive Director, Keep US Posted 08:14
Well, they should, we should immediately be able to, to take some of these burdens off the books and the Board of Governors, the postal service ought to have a much clearer trajectory on their budget to make different decisions. And I'll tell you, some of the concerns we have going forward is how this, how these savings and how these reforms actually will affect the operations of the Postal Service. As they move into the black and have a much rosier budget projection, how does that impact how we as Americans are going to feel the Postal Service works? Postmaster DeJoy last year rolled out a 10-year plan in which they are projected to raise postal rates significantly—historically, higher than ever before, in terms of percentages raised each each year—and they've also began to ratchet down the delivery times for our mail. And so, a first class piece of mail used to be on time if it was delivered in one to three days. Now, that's five days. And so we're seeing services reduced, and we're seeing costs go up. And so our big concern here, Dave, is that what the Postal Service does with these reforms and these savings is we hope that they will—and we're going to press them to—make sure those benefits are passed on to the American people by keeping rates down and improving service and delivery times. And if we don't see that, and I think there's gonna be a lot of frustrated members of Congress and American people that we did all these reforms, but they didn't turn into benefits that were tangible to the American people,
David Maloney, Editorial Director, DC Velocity 09:46
Right. But the rates are low, still, compared to a lot of other countries. And of course, it was built on the model of people writing letters and sending business mail, which isn't occurring with email as much as it had in the past. So, you have a model that was basically built on a service that people aren't taking advantage of anymore, and they're moving more towards a parcel- and package-delivery model. So, how does that affect a lot of what we're seeing with the reforms, when the model has changed, even though the quick the equipment and systems and the delivery methodology is different today for what people want than what the model was originally conceived as?
Kevin Yoder, Executive Director, Keep US Posted 10:24
Well, certainly, the Postal Service has to continue to be nimble and to move with the times, but I think one of the things we saw, particularly during Covid, is how much the American people still rely on the Postal Service for their daily needs. And you have, you know, whether it's correspondence, cards, letters, financial documents, medicine, we saw a lot of discussion about election ballots being moved in the mail, and even recently, Covid-19 tests are all being moved through the mail. So, we know that this is something that Americans still know is a critical service. And revenue is actually up during Covid. We're seeing more mail moving through, we're seeing people utilize the Postal Service more again, and we think that the Postal Service ought to build on that success, and rather than sort of be defeatist and say, Well, people just don't mail anymore, is to continue to try to make the Postal Service relevant in the American people's lives; keeping rates down; improving service and delivery times; and expanding its usage. And those aren't the things we're seeing coming out of the Postal Service going forward. What we're seeing is a projection of mail decline by 42%, over the next 10 years. And we think that is partly because of rates going up and historic rates, they want to really raise those rates up much higher than they are now, and they want to reduce the service times, and we think that, together, means that the American people will find less value and less bargain in using the mail and may turn to other things, and so we want to keep this something that the American people see as useful. We want to keep the American people posted, and we want the Postal Service to make reforms going forward that'll ensure that, and so we have a lot of work to do. Getting postal reform passed is certainly important, and it helps, you know, reset the, reshuffle the deck here. But to keep the Postal Service strong and useful and delivering for the American people, additional reforms are going to have to continue to be made.
David Maloney, Editorial Director, DC Velocity 12:20
And you had talked about the legislation does assure that six-day delivery continues every week. Since I mostly just get bills and advertisements in my mail, I could probably do with that every other day. Was there consideration for reducing the number of days of delivery for residential addresses?
Kevin Yoder, Executive Director, Keep US Posted 12:38
Yeah, there, there is this sort of, I think, minority camp out there that says that, Look, let's reduce the amount of time people get their mail, and that combined with. Let's continue to raise the rates that people have to pay to deliver their mail, and what that leads to is less people using the mail. And so, what you ultimately have is a downward spiral, where each reduction in service time, each reduction in service days, reduces the amount of people that use the mail. So, maybe go to five days, like you said, maybe go to every other day, maybe go to once a week, and pretty soon we've lost this resource that the American people count on. Because when you start, you throw in a holiday, you throw in a Sunday, you start saying you know, first class mail is not on time—is on time—if it's five days away, or five days or less, what you have is a lot of people getting frustrated with the mail-service delivery times, and not getting things. So, when you are waiting for something that's important—if you're not looking for something in the mail, maybe not as big a deal, but when you are waiting for something important—you know, many of these things we talked about: medicine, financial documents, your election ballots, or Covid-19 tests, you know, there are a lot of people waiting for really important things in the mail, and if it's, if it comes every other day, or and then it takes five days within that, you're going to start waiting, you know, a week, two weeks to get something delivered, you say, The heck with it. This isn't a service that I value anymore. We think that spells the end of the Postal Service in America. So, we want to keep it strong, want to keep it delivering daily, we want to keep the rates down, and keep it something that the American people continue to trust and know that it'll be there for them when they need it.
David Maloney, Editorial Director, DC Velocity 14:14
Right. That makes sense. Now that the legislation is passed, what more needs to be done to keep the Postal Service on a firm financial footing. and what are, what kinds of things is your organization, Keep US Posted going to continue to do to work towards that?
Kevin Yoder, Executive Director, Keep US Posted 14:30
Well, some of those very things. We think that keeping customers' base strong for the Postal Service is the key to its future financial footing. And so, we want to make sure the Postal Service doesn't make changes that would alienate or eliminate that customer base. And so that's what we're going to be working towards, is trying to make sure that this continues to be a strong, well-run entity; that it delivers on time and under budget for the American people. We want to make sure that there doesn't need to be a taxpayer bailout. You know, this is, the Postal Service receives no taxpayer funds. It truly relies on the, on the stamp revenue and the postal revenue for each, each parcel that's that's put in the mail, and so we want to make sure that that system continues to be effective, efficient, and that those 161 million addresses that it delivers each day to, that it can continue to do that and to continue to deliver for the American people.
David Maloney, Editorial Director, DC Velocity 15:30
We've been talking with Kevin Yoder, a former congressman, and currently the executive director for Keep US Posted. Thanks again for being with us today, Kevin, for a great conversation. and for the good work that you do.
Thanks. Dave. I appreciate being on your program.
David Maloney, Editorial Director, DC Velocity 15:44
Now let's take a look at some of the other supply chain news from the week and, to stay on the federal government theme: Ben, you wrote this week about a new White House initiative to break supply chain delays by creating a data-sharing platform called FLOW. What more can you tell us?
Ben Ames, Senior News Editor, DC Velocity 15:59
That's right. And it is striking. It's a busy week, in terms of federal input on a lot of the logistics flows that we cover. Those delays are very real, and they've been very painful. We've been covering backups for months now at the magazine, at maritime ports, at intermodal hubs, on highways, and warehouses. There have been a lot of suggestions for ways to avoid the resulting problems—which are import and export delays, shortages of shipping containers. There are a lot of headaches. A lot of those efforts so far have not had much effect—things like, there are threats of finding the carriers for being too slow to move containers off of docks, or passing a congressional act that forces container ships to negotiate better with shippers. A couple things do seem to be helping: that there's been a recent effort to create popup container yards, just to create more free space at the ports. So, this week, we heard about the latest effort, and that's a Biden administration initiative to have companies throughout the logistics sector share much more information with each other. The White House calls it the Freight Logistics Optimization Works, or FLOW, and to make it happen, the Biden administration invited 20 major retailers and logistics providers this week to cooperate in developing a proof-of-concept information exchange. The companies participating are big names, you know Port of Los Angeles, Georgia Ports Authority; the maritime folks—the CMA CGM, MSC; also C.H. Robinson, Target, FedEx—so, you know, all the big players, and, you know, the administration wants to get everybody on board here. They talked about involving shipping lines, ports, terminal operators, truckers, as we said, warehouses. So the span of this thing's very large.
David Maloney, Editorial Director, DC Velocity 18:01
Okay, but really, there's nothing new about the idea of sharing more data for better supply chain visibility. Why would it work this time?
Ben Ames, Senior News Editor, DC Velocity 18:10
Yeah, great question. Logistics real estate firm Prologis said supply chains are notoriously, in their words, "closed and opaque," and that lack of data sharing has exacerbated the supply chain crisis. So, that one word, "crisis," may show that companies may be more inclined to share that data this time around, just because there's so much pressure across the board to get supply chains moving again. Another couple reasons that the FLOW effort might gain some traction: These are a couple companies that are not involved in the core White House efforts, but there's a business software vendor called VAI, V-A-I, that pointed out that businesses have already done a lot of work in recent years in what people talk about as "digital transformation." That includes things like real-time tracking, or truck routing. Another company called Data Gumbo—they make smart contracts—said a crucial part of this effort will be finding the technology that allows the data sharing. That sounds kind of obvious, but you know, it's a good question, you know, how's this thing gonna work? Data Gumbo said that blockchain might be that technology. So, if that works, obviously, you know, blockchain is a fairly recent phenomenon, so perhaps that could be another helpful variable that makes the thing move along a little better. So, as you said, it's not exactly a new idea to have people, the logistics folks, talk more, and in fact, several other groups are already working on comparable plans. I think about, there's a TradeLens platform that was jointly created by Maersk and IBM, and there's also, just two weeks ago, we were writing in the magazine about something called the national freight data portal, which is now under development by the Supply Chain Optimization and Resilience group. So, you know, it's too early to see how this will all play out, but all those factors looks like they may play a role.
David Maloney, Editorial Director, DC Velocity 20:10
Yeah, it will be interesting, and of course, something will continue to follow. Thanks, Ben, for the good report.
Ben Ames, Senior News Editor, DC Velocity 20:16
David Maloney, Editorial Director, DC Velocity 20:17
And Victoria, you wrote this week that commercial real estate is seeing a nice bounce back from its pandemic lows. Can you share some details?
Victoria Kickham, Senior Editor, DC Velocity 20:25
Absolutely, yeah. So, commercial real estate investment has really bounced back, and the industrial segment is actually leading the way, and that's because of the demand that remains so strong for warehousing and logistics properties. We've talked about that in recent months, and the trend continues. We saw this in a report from commercial real estate firms CBRE in the past week. The company's U.S. Cap Rate Survey for the second half of 2021 predicts a 10% year-over-year increase in commercial real estate investment this year. And that follows strong demand last year that led to falling capitalization rates, or cap rates, especially in the industrial segment of the market. Just as a little background, cap rates measure a property's value by dividing its annual income by its sales price, and a lower cap rate generally indicates a higher value. So, what we're seeing is a strong investor interest for commercial real estate, and industrial properties in particular. Part of the reason for this is e-commerce growth, which has elevated property values in logistics hubs. The strong demand for space is expected to continue, as we've spoken about on the podcast in the past, and this is especially in markets where they're seeing low cap rate levels. Those include places like Riverside, California, which is in the Inland Empire; Phoenix and Dallas—those are three areas mentioned in the report—and also in supply-constrained port markets: Los Angeles, Oakland, and northern New Jersey, have some of the lowest cap rates in the U.S., according to the CBRE report. So, these are really strong markets for investment and growth.
David Maloney, Editorial Director, DC Velocity 22:00
Victoria, given the volatile times that we're living in, is there anything on the horizon that may dampen the outlook?
Victoria Kickham, Senior Editor, DC Velocity 22:07
Yeah, there's certainly a lot to deal with, including inflation and all the geopolitical crises we're seeing. The report mentioned the Russian invasion of Ukraine in particular, but said those kinds of issues are really not expected to have a major effect on the real estate market outlook here. They pointed to strong market fundamentals and the economic recovery that we're seeing here from the pandemic as issues that they say will keep cap rates at current levels. You know, as I mentioned at the outset, the demand for warehousing space is really at record levels. We reported on logistics real estate rent trends recently as well, and found that rents for logistics facilities saw record growth last year, both here in the United States and around the world. Another logistics real estate company, Prologis, said this month that rents for logistics facilities actually increased 15% globally and 18% in North America last year, and they predicted growth in the high single digits this year. So, the need for space continues, and current trends are really expected to last.
David Maloney, Editorial Director, DC Velocity 23:12
Yeah, so no letup on that demand for warehouse space. Thanks, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 23:17
David Maloney, Editorial Director, DC Velocity 23:18
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories. And check out the podcast Notes section for some direct links on the topics that we discussed today.
And our thanks again to Kevin Yoder of Keep US Posted for being our guest today. We welcome your comments on this topic and our other stories; you can email us at email@example.com. We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. Our new episodes are uploaded each Friday.
And speaking of subscribing, we encourage you to check out our new sister podcast series, Supply Chain in the Fast Lane. It's coproduced by the Council of Supply Chain Management Professionals and Supply Chain Quarterly. The initial series looks at the state of logistics. This past Tuesday we discuss ocean freight, and next Tuesday, we'll look at the parcel market. Subscribe to Supply Chain in the Fast Lane wherever you get your podcasts, and be sure to catch up on the past episodes.
And a reminder that Logistics Matters is sponsored by Beckhoff. Discover intralogistics automation without limits. Beckhoff offers a complete, ultracompact motion-control system for automated material handling equipment, including a range of space-saving motor and drive solutions for BLDC, MDR, servo technology, and more. Make your move to better motion control by visiting Beckhoff.com/intralogistics.
We'll be back again next week with another edition of Logistics Matters, when we'll look at the impact of those high diesel prices on our freight markets, so be sure to join us. Until then, please stay well and have a great week.